Moscow and Damascus Discuss Gas amid Syria's Civil War
Christmas day saw Moscow and Damascus penning a 25-year deal allowing exploration and drilling off the Syrian coast. The deal grants state-controlled Russian group Soyuzneftegaz controlling interest on any oil or natural gas found in Syria’s exclusive economic zone. Soyuzneftegaz will invest USD 15 million in surveys and another USD 75 million if/when it commences drilling. Syria has suffered tremendously from sanctions imposed by the UN Security Council. The existing onshore oil and gas fields are currently controlled by rebels opposed to the Assad regime.
The Levant basin is believed to be rich in hydrocarbons, containing up to 122 Tcf of natural gas according to estimates by the U.S. Geological Survey dating from 2010. Israel and Cyprus have both commenced exploration activities. While Israel has encountered substantial amounts of natural gas that could turn the country into a major energy exporter, Cyprus’ appraisal drilling of the first offshore natural gas field discovered by Noble Energy in 2011 revealed modest resources.
Israel’s two major fields are the Leviathan natural gas field with gross mean natural resources of 18 Tcf of natural gas and the Tamar natural gas field with gross mean resources of 10 Tcf. Cyprus’ Aphrodite field’s estimates were updated to 3.6 to 6 Tcf of natural gas. Lebanon has not yet commenced exploration activities off its coast delayed by domestic political obstacles aggravated by the Syrian conflict next-door. Lebanon is set to launch its first bidding round in January 2014 but its inability to form a government threatens further delays. Additionally, Beirut is currently having security concerns due to the spillover of the Syrian crisis.
The Syrian-Russian deal comes as a confirmation of Moscow’s continued support to the Assad regime. The agreement was also interpreted as a sign of gratitude from the regime to Russia’s friendship. The deal will not have any immediate repercussion given that even if natural gas and oil were to be discovered in Syrian waters, extracting and monetizing such resources would take years to materialise.
The deal adds another factor of complication to the already complex geopolitics of the Eastern Mediterranean. Lebanon and Israel have not yet resolved their maritime border conflict, both claiming an area equivalent to approximately 850 square kilometers as their own. Lebanon and Cyprus have reached an agreement in regards to the demarcation of the maritime borders delimitating their respective exclusive economic zones, but the deal was not ratified by the Lebanese authorities. Syria has not reached maritime border agreements with neither Cyprus, Turkey or Lebanon.
The deal offers Moscow the opportunity to join the Eastern Mediterranean energy game. Eastern Mediterranean countries have the ambition to export some of the natural gas discovered in their waters to Europe diversifying Europe’s energy supply and fulfilling the EU’s additional gas needs. Cyprus is currently working on building an LNG terminal in its Vasiliko coastal area in order to reach European and Asian markets. Russia is not ready to loosen its grip over the European market. By getting involved in Eastern Mediterranean offshore gas explorations, Moscow is attempting to eliminate or decrease the threats brought by shale and LNG.
Moscow’s interest in the Eastern Mediterranean is not limited to Syria. Russian firms such as Rosneft, Novatek and Gazprom are keen to participate in Lebanon’s first licensing round. Gazprom also secured the exclusive rights to export LNG for the Tamar field offshore Israel.
The timing of the deal nevertheless came as a shock at a time when Syria is still ravaged by a conflict that does not seem to be ending anytime soon. The interest of foreign entities and major international oil and gas players seem to be solely preventive and does not suggest that the region will reach prosperity and stability before resolutions of the various conflicts are achieved. Attempts to reach agreements and build an environment of positivity that would benefit the various Eastern Mediterranean players have all failed in the past in a part of the world known for its complicated geopolitics and never-ending political discords.
Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean. Email Karen on ayat_karen@hotmail.com. Follow her on Twitter: @karenayat